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Workplace Financial Fitness

A harmonic convergence of employer and employee bottom lines.
By Michelle Greene
Responsible companies should provide tools to improve their employees’ financial well-being, as a way of helping their own bottom lines as well as their employees. Corporate responsibility teams can play a leading role in making it happen.

According to a recent study by MetLife, more than 75 percent
of large companies have wellness programs for their employees. Employers provide wellness programs to save money on healthcare costs, as well as for the positive impacts of providing valued benefits to employees and helping them to become more healthy. Few companies include financial fitness as part of wellness programs. Yet financial fitness is an area that offers many of the same benefits to companies, and is, in many ways, a more natural area for employer involvement.

While most large companies offer retirement plans like 401(k)s, often companies’ financial offerings end there. It is critical that employees save for retirement, but the need for financial tools goes far beyond retirement savings. According to a 2011 working paper published by the National Bureau of Economic Research, one in every three American families could not pull together $2,000 in an emergency. And according to the National Survey of Unbanked and Underbanked Households, released in 2012, one in every four households uses alternative financial services such as check cashers and payday lenders. And, again according to MetLife, about half of employees report that they are worried about making ends meet (with more than 20 percent of all employees and a third of Gen Y employees admitting to absenteeism and/or distractions on the job as a result of personal financial issues).

Employers are in a unique position to help improve their employees’ financial well-being. It doesn’t have to be expensive, and the benefits could pay for themselves. While more quantitative data is still needed, we are seeing mounting evidence that effective workplace financial fitness programs can save employers money, decrease absenteeism, increase productivity, and improve morale and loyalty.

In an age of shrinking HR budgets, another competing priority
is often not welcome. But employers can make simple and inexpensive changes that can have large impact. For example, changing retirement plans to auto-escalation or providing an automatic savings option at payday can have a meaningful impact on employees’ savings rates. Of course, neither of these alone is enough for good financial health, and companies should consider providing services, like Hello Wallet, that help empower employees to take control of their own finances (often while also saving the employer money), as well as providing access to services like debt management assistance or financial counseling that can help to relieve financial stress. The President’s Advisory Council on Financial Capability developed useful guidelines to help employers take positive steps
for their employees’ financial fitness. At NYSE Euronext, we see promoting workplace financial fitness among employers as part of our responsibility, and we have free tools available for our employees and issuer companies that want to help improve their employees’ financial well-being.

Employers provide paychecks and the primary source of income
for most employees. This involves them in payday—a time with great potential for impact on financial decision-making. In some companies, the delivery of the paycheck has become a way to aid unbanked employees, either by helping them open accounts and providing direct deposit, or moving from paper checks to prepaid cards, allowing employees to avoid check cashing fees. In a few companies, employers are providing paycheck advances to help employees avoid payday lenders. It is important to stress that such actions must be done right to ensure that they indeed help the employee (and employer), but the potential is promising. Some progressive employers—particularly in industries with significant populations of low and moderate income workers, such as the hospitality and restaurant industries—are even differentiating themselves to potential and current employees through the strength of their financial fitness offerings, using these benefits in an effort to increase retention in sectors with significant turnover.

Is it the role of CR to implement a workplace financial fitness initiative? Not in most companies. But just as in other areas that matter to the ethos of our companies – like diversity or wellness—CR can play an important role. We can help to raise the issue, identify the opportunities it presents to our own companies, and ensure that key decision-makers are aware of the compelling case to be made for offering such benefits.

Michelle Greene is vice president and head of corporate responsibilty for NYSE Euronext.

Tags: Benefits, Consultants & Advisors, Engaged Workforce, HRO Today Global, Professional Contribution

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